I don't think that that report is accurate. EPIC was praising the system and what it could do, and they are a graphics first house (I mean, when your main product is Unreal Engine, come on). My personal belief is that Wii U will have abilities around 2x of the current gen systems. Keep in mind that the studio that this came out of may have old Dev Hardware, or just not know how to get the best graphics out of the machine.
The technology in 360 and PS3 is insanely old at this point. GPU technology has come a LONG way in the last 6 years. Of course, this being a console, it won't have the cutting edge, because the GPU itself would cost more than the system, but you can get VERY GOOD graphical performance from a sub-$100 GPU these days, and that is a price that a single consumer would pay. Nintendo, with its massive coffers and fan base can definitely get a much better per chip price than any of us could.
Here is to hoping that these rumors are just much thrown by Sony/MS, or a bad dev house not knowing what they are doing with hardware.